Singapore: MAS Guidelines on Individual Accountability and ...

The guidelines by the MAS focus on five high-level outcomes for financial institutions to promote ethical behaviour, responsible risk-taking, accountability of ... Connectwithsales:1-866-981-1558 ContactUs UpcomingWebinars CustomerSupport SignIn Products KnowYourEmployee(KYE) PersonalTradingCompliance Gifts,EntertainmentandHospitality PoliticalContributionsandDonations OutsideBusinessActivities Authorization,Registrations,andLicensing RoleMonitoringandAssurance ComplianceProgramManagement ConnectedPersonsandRelationships KnowYourTransactions(KYT) TradeSurveillance DealandEngagementReview InsiderandMNPI Suitability KnowYourThirdParty(KYTP) ThirdPartyRisk ThirdPartyApprovals KnowYourRisk(KYR) Solutions EducationCenter Blog Webinars Resources AboutUs Awards Careers Company Partners SolutionsOverview Aeneanlaciniabibendumnullasedconsectetur.Morbileorisus,portaacconsecteturac,vestibulumateros.Praesentcommodocursusmagna,velscelerisq. ExploreSolutions ComplianceOversight Understandyourfirmriskprofile ESGCompliance MonitorESGrisks Anti-Bribery&Corruption Identifypotentialmisconduct SeniorManagers&Certifications MeettheregulatoryobligationsofSMCR ConductRisk Monitorconflictsofinterestandconductrisk ControlRoomCompliance Managedeal-relatedconflicts Pay-to-PlayCompliance Monitorpoliticalcontributionsanddonations ConflictsofInterest Helpmaintainingtheconductofthefirm CryptoCompliance Avoidcryptocurrencyconflictsofinterest SmallFirmCompliance Completesolutionforsmallfirms CorporateCompliance Addresstheneedsofregulatedorganizations Singapore:MASGuidelinesonIndividualAccountabilityandConduct June10,2021 |ByKelly-AnnMcHugh | SMCR, conductrisk, Culture, Accountability      TheMonetaryAuthorityofSingapore(MAS)releaseditsguidanceonthe10thSeptember2020onthefivehigh-leveloutcomesthatfinancialinstitutionsshouldachieveonindividualaccountabilityandconduct. TheguidancecomesafterarecentconsultationperiodtothemarketandhastakenwhatotherregulatorsliketheFinancialConductAuthority(FCA)intheUKhavereleasedfortheirregulatedentities,andexpandsitforSingapore.TheGuidelinesareaccompaniedbydetailedFrequentlyaskedQUestions(FAQs)onGuidelinesonIndividualAccountabilityandConduct,aswellasanumberofAnnexesdescribingtheobjectives. MASIndividualAccountabilityandConductRegime TheguidelinesbytheMASfocusonfivehigh-leveloutcomesforfinancialinstitutionstopromoteethicalbehaviour,responsiblerisk-taking,accountabilityofseniormanagersandreinforcementofgoodconductamongstaffandbusiness. TheMASexpectsfirmstoreviewtheirmeasurestocomplywiththefiveoutcomesontherecentlypublishedguidelines,theoutcomesexpectedare: OutcomeOne-Seniormanagers’responsibilitiesformanagingandconductingtheFI’scorefunctionsareidentified. OutcomeTwo-Seniormanagersarefitandproperfortheirrolesandheldresponsiblefortheactionsoftheiremployeesandtheconductofthebusinessundertheir OutcomeThree-TheFI’sgovernanceframeworksupportsseniormanagers’performanceoftheirrolesandresponsibilities,withaclearandtransparentmanagementstructureandreportingrelationships. OutcomeFour-Materialriskpersonnelarefitandproperfortheirroles,andsubjecttoeffectiveriskgovernance,andappropriateincentivestructuresandstandardsofconduct. OutcomeFive-TheFIhasaframeworkthatpromotesandsustainsamongallemployeesthedesiredconduct. Source:MAS.gov.sg-GuidelinesonIndividualAccountabilityandConduct Theregulatoremphasizesthattheiraimisnottoprescribe“one-size-fits-all”approachtoachievetheoutcomes.Forthisreason,theoutcomes-basedapproach,givesflexibilityonhoweachfirmwillsetuptheirframeworktopromoteahealthyculture,achievetheobjectivesandtomeetthefiveoutcomesovertimeisrecommended. Inaddition,theMASarticulatedtheirapproachtowardscultureandconduct,whatconductrisklookslikeandanoverviewofthefiveoutcomesonitsinformationpaperalsopublishedonthe10thofSeptember.TheexamplesontheMASinformationpaperarearesultofsurveysanddialoguesessionsconductedwithbanks,insurersandcapitalmarketintermediaries. Theinformationpaperisamust-readtoallfinancialinstitutionsregulatedbyMAS.ReadthefullinformationpaperonMAS.gov.sg Inthepaper,theregulatoraddsthatinfact,rulesandregulationsarenotenoughtomaintainahealthyculture.TheMAShighlightsthatfinancialinstitutionsshouldgo“theextramile”topromoteacultureofethicalbehaviourandcompliance.Andthereareseveralactionsthatfirmsshouldtaketomonitorandaccesscultureandconductandonlycomplyingwithregulatoryrequirementsorinternalrulesisnotenough. Afterall,theMASIndividualAccountabilityandConductregimeaimtocreateahealthycultureandpromotepositiveconductinthefinancialsectorinSingapore,aswellastoguidefirmsthatarefacingchallengesandhavingdifficultieswiththeimplementationoftheregime. InananalysispaperrecentlypublishedbyThomsonReutersRegulatoryIntelligence,NiallCoburndescribespositivelytheobjectivesoftheguidelines:"TheMASguidelinesareclearlywrittenandwillhelpfinancialinstitutions,seniormanagementandemployeestoembedastrongcultureofresponsibilityandethicalbehaviour,thusensuringbetteroutcomesforcustomersandstakeholderswhileatthesametimehelpingtopreservethelongevityoftheorganisation".  On-demandWebinaronMASGuidelinesonIndividualAccountabilityandConduct JoinKelly-Anninthison-demandwebinarwithNiallCoburnandNathanLynch,discussingthenewMASIndividualAccountabilityandConductRegime,howwegothere,andwhereweseeenforcementgoingthankstotheintroductionoftheseregulationsandguidelines.  MCOConductRisksolutionshelpfinancialservicesfirmsaddresstheregulatoryobligationsofSeniorManagers.MyComplianceOfficecanassistwiththeco-ordinationandmanagementofyouremployeesandSeniorManagersLicenses,ContinuousEducationandrequestattestationabouttheirFitness&Propriety. ContactoneofourexpertstoseehowMCOcanassistyourorganisation. DeepDiveontheMonetaryAuthorityofSingaporeGuidelinesonIndividualAccountabilityandConduct WhataretheSingaporeMASdefinedCoreFunctions?  Thefollowingfunctionshavebeendefinedas"CoreManagementFunctions"aspertheGuidelinesandAnnexB.  ChiefExecutiveOfficer ChiefFinancialOffice/HeadofFinance ChiefRiskOfficer/HeadofRisk ChiefOperatingOfficer/HeadofOperations ChiefInformationOfficer/ChiefTechnologyOfficer/HeadofTechnology ChiefInformationSecurityOfficer/HeadofInformationSecurity ChiefDataOfficer ChiefRegulatoryOfficer/ChiefComplianceOfficer HeadofFinancialCrimePrevention HeadofCompliance HeadofHumanResources HeadofActuarial HeadofBusinessFunctione.g.HeadofRetailbanking/PrivateBanking/CorporateBanking/Underwriting/Marketing/Investmentetc OtherCoreFunctionsasneeded   OutcomeOne-SeniormanagersresponsibleformanagingandconductingtheFI'scorefunctionsareclearlyidentified TheBoardorHeadOfficeshouldensurethatthereisclearidentificationofseniormanagerswhoareresponsibleforfunctionsthatarecoretothemanagementofthefinancialinstitutionsaffairs,theseindividualswillbethosethatperformactualoversightresponsibilities,havedecision-makingauthority,andarenotdependentontheirlocation.TheboardmustensurethattheseindividualsdoindeedprovideappropriatemanagementoversightoverallmaterialaspectsoftheFI.ItwasalsomadeclearthatanyBoardDirectorwhodoesalsoperformanexecutivefunction,theywouldalsoapplytobeingdefinedwithinthisguideline,duetothenatureoftheirroleinday-to-daymanagement.  OutcomeTwo-Fit&Properfortheirrolesandheldresponsiblefortheactionsoftheiremployees SingaporehasextensiveFitandProperCriteriawhichwereupdatedonthe28thJanuary2020,itisimpliedwithintheGuidelinesthatthesewouldapplytothoseSeniorManagersthatareperformingCoreManagementFunctionsgoingforward.  AspartofassessingFitness&proprietythismustbeconductedpriortotheirappointmentandonanon-goingbasis(typicallyonce-a-yearandonanyrolechange). OutcomeThree-GovernanceFrameworkmustsupportseniormanagers'performanceoftheirrolesandresponsibilitieswithaclearandtransparentmanagementstructureandreportingrelationships.  Financialinstitutionsshouldarticulatetherolesandresponsibilitiesoftheirseniormanagersandtheoverallmanagementstructure,includinganyresponsibilitieswithinanymanagementcommittees.ThisisusuallydefinedwithinaRoleFrameworkandaJobDescription,themanagementstructureandhowtheemployeereports,mustalsobedefined.Accurateandcomprehensiverecordsmustbemaintained.MASisn'taskingforsubmissionofthese,however,aspartoftheirsupervisoryprocess,thehiringprocessesmaybereviewedtoensurestaffinCMF'sarewellscreenedaspartoftheirhiringprocess,andtoensurethemanagerunderstandstheirareaofresponsibility.  Aspartofthisprocess,theseniormanagermustacknowledge(attest)hisorherroles,responsibilitiesandreportinglines.Itisimportantthatthisinformationonthestructure,managementcommitteesandseniorrolesisknownandsharedwhentherearechangesapprovedbytheboard/headoffice.Inaddition,successionplansshouldalsoberegularlyreviewedincludingtheidentificationofpotentialfuturecandidates.  Furthermore,withregardstoManagementCommittees(whichmustalsobeaccountable),theremustbeclearTermsofReferenceandreportinglinesforthesecommittees.DoesyourorganisationhaveformalTermsofReference?Doyouknowwhatarethekeyissuesthatshouldberaisedtosuchcommittee?  MyComplianceOfficeisoftenusedbyourclientsforsendingoutsuchcustomquestionnairestoseniormanagersonanannualbasis.AttachinganyrelevantdocumentationontheirRoles&Responsibilities,andreferencingthemanagers'Authorisations,ContinuousEducationandLicenses.Formoreinformationonthis,pleaseseeourAuthorisations,registrationsandLicensesModule. OutcomeFour-MaterialRiskPersonnelmustbefit&properfortheirroles,andsubjecttoeffectiveriskgovernance,andappropriateincentivestructuresandstandardsofconduct TheMonetaryAuthorityofSingaporeGuidelinescontinuetoOutcomeFour,wheretheyproceedtodefine"MRP's"akaMaterialriskpersonnel,thosewhohavetheauthoritytomakedecisionsorconductactivitiesthatcansignificantlyimpacttheFI'ssafetyandsoundness,orcauseharmtoasignificantsegmentoftheFI'scustomersorotherstakeholders.(SeetheirGuidelinesformoreinformation!).TheseindividualscouldincludeFront,MiddleorBackOfficefunctionsoranyemployeewhichhassupervisorycapacityoverthesefunctions,butdon'tfallwithinthepreviouslydefinedSeniorManagers.Thiswouldbeparticularlypresentinlarge,globalorganisations.  TheFIneedstodefinetheseMRP,andensuretheyassessthefitness&proprietyaspertheMASguidelinesonfit-and-proper,bothpriortotheirappointmentandanon-goingbasisasperOutcomeTwoabove.Theguidelinescontinuetogoon,specificallyaboutthestandardsofconductthatapplytotheseindividuals,ensuringtheyhavecommensuraterisklimitsandincentivesalignedtothenatureandtimehorizonofrisks.  Essentially,theseindividualsdrivealotofthebusinessthatanFIproduces(eitherapprovingorbeinginvolvedintransactionsthatmaygiverisetoCredit,MarketorLiquidityRisks. OutcomeFive-TheFinancialInstitutionhasaframeworkthatpromotesandsustainsamongallemployeesthedesiredconduct  Thefinal,andmostbroad,butyetimportantoutcome,isthatofensuringthefinancialinstitutionconductsitsbusinessandinteractswithcustomerswithvaluesthatupholdthemarketintegrityandappropriateconduct/culturalstandardstheregulatorexpects.TheTone-from-the-topandextentthisisreinforcedbypolicies,procedures,controls,andalllevelsofmanagementwillbeveryimportanttomeetingthisoveralloutcome.TheMonetaryAuthorityofSingaporealreadyhasextensivelegislationandguidelineswithrelationtoconduct,suchastheLicensingandConductofBusinessRegulations,MinimumEntry&Examinationrequirementsforvariousregulatedentitiestonameacouple.  TrainingyouremployeesonConduct,Cultureandthespecificregulatorystandardsandexpectationsisnottobeoverlooked,andshouldincluderegularmicro-trainingtoreinforcethetopics.Thistrainingcouldbethere-educationafteranincidentoreducatingstaffinaparticularlocationtoconsiderotherwaysofdoingbusinessbasedontheoutcomesyouareseeinginthatmarket.  MyComplianceOfficerecentlyhostedawebinarwithKateMillerofStandardCharteredBankspecificallyonusingScience-basedexperimentationtoimprovetheConductwithinFinancialInstitutions.TakealistentoallmajorPodcastsolutionsontheRiskyWomenPodcast.  HavealookatMCO'sRoleMonitoringandAssurancetoolthatcapturesrelevantemployeefunctions,responsibilities,andactivitiesincompliancewithSMCR,SEAR,BEARandtheSingaporeMASIndividualAccountabilityandConductRegime.LearnmoreontheRoleMonitoringandAssurancepage. 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